Hidden charges in care homes

8 February 2016

In Hidden charges in care homes [ 0.69 mb] we explore consumer protections within the care home market. We know that older people living in care homes risk getting a poor deal for a variety of reasons. They may have physical or mental health conditions which limit their ability to advocate for their own interests.

Furthermore, their choices are often limited by geography, financial resources and time - many care home packages, for instance, are distress purchases. We also know that once a resident takes up their place in a home, they are unlikely to shop around or switch provider as moving care homes can be highly distressing and can even present health risks.

In light of this, we would hope that the market operates with plenty of clear information upfront to guide the initial decision, and then strong protections (for example, long notice periods ahead of price changes) to protect consumers once they have chosen a care home.

We carried out mystery shopping of 404 care homes for older people across England and combined this with insights from our own data, as well as the secondary literature. We wanted to know whether there were any signs that providers were taking advantage of the vulnerable positions of their consumers.

We identified three symptoms which suggest that this might be the case:

Some care homes give extremely short notice periods for fee increases. Nearly one in ten (eight per cent) care homes only give a week’s notice - this could affect as many as 22,000 older people. However, nearly one in five (18 per cent) offer a year’s notice. Two thirds of care homes offer four weeks notice or less for fee increases. The fact that some give far more notice shows that it is possible to do so. Care home fees in England rose on average by £900 last year; an average increase of 2.7 per cent. In the East of England, residential care home fees rose on average by £2,184; an average increase of 6.8 per cent.

Most care homes fail to pass on savings, and some may be profiting when when residents are away for extended periods of time, for instance, when in hospital. The large majority (96 per cent) of care homes fail to offer any discount when an older person is absent for four weeks. Whilst care homes clearly have fixed overheads - such as staff and running costs - other variable costs, such as laundry, meals, electricity and heating, are avoided when a resident is absent. Most care homes do not pass these savings on to residents.

Key charges, such as carer assistance and chiropody, are often hard to discover before moving into a care home and can be very expensive.For example, a weekly trip to the hospital, requiring two hours of carer time, could end up costing as much as £5,200 a year. Citizens Advice has provided support to people who have incurred unexpected bills such as a £1,000 phone bill and unspecified entertainment charges.

Through our research we identify a number of opportunities to improve consumer protections within the care home market and we will be sharing our findings with relevant organisations.